How not to run an airline (Comair edition)

Just 24 hrs ahead of asserting its determination – on Tuesday night – to “voluntarily suspend” all Kulula and British Airways regional flights from Wednesday (June 1), Comair ran a sale across its possess distribution channels which promised up to 30% off flights (it ran a sale by way of certain journey brokers on May possibly 25).

At this position, absolutely the directors of the team realized that in the absence of funding the airline was about to strike the wall?

Is this not wholly unconscionable?

On April 26, it did accurately the very same thing (with up to 30% off flights).

Discover a sample at thirty day period-finish?

One particular may well concern whether or not the directors ought to be billed with reckless investing – this is not far off the shenanigans Mango pulled for the duration of its dying throes (in the absence of a bottomless pit of state funding). At minimum Comair did not ground its flights on the morning due to the fact it owed ATNS/Acsa income, as Mango was pressured to do.

It remains unclear who Comair’s present lenders are.

Comair has run out of dollars. But this is not new news.


As considerably back as January 31, the business rescue practitioners warned in their every month report that the team necessary “further funding”. They observed that it had dropped about R100 million in formerly booked but ‘unflown’ earnings, principally thanks to the Uk journey ban in December as a final result of the Omicron variant of Covid-19. The bulk of this is inbound British Airways profits.

However, the directors would’ve identified this 6 months in the past – in December – presently. The will need for funding has been mentioned in every single month-to-month report from the business rescue practitioners because that date.

In March, it verified in depth to Moneyweb that it “has been in an ongoing process of restructuring its balance sheet from both equally a personal debt and fairness perspective because the beginning of the yr, which has concerned ongoing engagement with Comair’s traders and loan companies to ensure that the correct kind and quantum of funding is raised”.

Admittedly, this was before the forced grounding of the Comair fleet, which flies around 40% of the market, by the Civil Aviation Authority (CAA) for 4 times in March since of safety problems.


The business rescue practitioners reported at the close of March that: “Although the financial affect of this suspension was severe, it has not resulted in a improve to the Company’s existing funding prerequisites.” So while the airline was forcibly grounded, it didn’t make matters improved or even worse.

It will get stranger …

The inexplicable pity bash mea culpa in past week’s Financial Mail, no question penned by Comair’s PR handlers, could not have been worse-timed. In the ‘opinion’ piece, CEO Glenn Orsmond reported, about its failures during the grounding, that: “We should have communicated much more obviously and engaged immediately with the media. We dropped the ball, and we will not repeat the oversight.”

This was a full-website page apology … bizarre timing for an airline likely about to strike the wall.

In the piece, Orsmond (/his handlers) wrote: “The FM penned a scathing critique of Comair in March … soon after our flights had been quickly suspended by the SA Civil Aviation Authority [CAA]. It created for agonizing examining, but the journal was ideal: airways depend on the believe in of their passengers, and this is as substantially about open and crystal clear communications as it is about keeping a spotless protection record.”

‘Orsmond’ observed it was “gratifying to notice that every day profits right away reverted to the ordinary pre-suspension ranges the moment the CAA gave us the all-clear”.

“This is an indicator of the toughness of our two airline models, and our loyal purchaser base.”

A cynic may possibly argue that this was simply as a final result of source getting reduce than pre-Covid with a market place demanding a large amount of seats, specifically right after Mango’s failure.

The word belief is undertaking a lot of perform in Orsmond’s letter. Airlines depend entirely on believe in. Nevertheless, somehow Comair penned this tone-deaf “opinion” a week right before it “voluntarily” grounded its fleet.

We don’t know the correct situations of the negotiations between Comair (its pretty mysterious ‘rescue consortium’) and its loan companies and funders. Evidently these talks have not yielded results.

And it is not crystal clear why funders and lenders will quickly, in the up coming several times, give funding for the ailing airline (which, try to remember, has publicly required funding given that January). Creditors and funders will have identified of these needs from December already.

This is poor.

Discovery Vitality CEO Dinesh Govender stated in a letter to shoppers on Wednesday that for flights booked in between June 1 and June 7, “Discovery Financial institution will mechanically refund the amount of money [customers] put in on that flight into their Discovery Lender account by the conclusion of business today”.

He highlighted that it does not “have a lot more facts at this stage about the resumption of [Comair’s] flights”.

Perhaps extra ominously, the letter states that: “While Comair’s individual inner refund and credit rating processes continue to apply for all other afflicted customers, we are functioning on option reserving and refund remedies for all Vitality users to be announced just before the finish of June.” [emphasis Moneyweb’s]

Discovery Vitality offered R100 million in funding to Comair in pre-payment for tickets booked as element of the rescue system.

FNB’s eBucks, traditionally tied to Comair, hedged its bets a selection of a long time back by offering savings to benefits consumers throughout a range of airways beyond Kulula and British Airways.

Discovery introduced its Vitality Vacation system for Discovery Bank clients previously this year in an work to derisk the exposure to Comair to supply buyers with special discounts throughout a variety of airways.

This perceived decline of self confidence from its one most important partner, Vitality, can not be good.

Appropriate now, whilst the range of inbound travellers by means of British Airways will be minimal simply because of the year, executives at the British isles airline will absolutely be pondering regardless of whether or not they can believe in Comair to go on to fly inbound passengers (from BA) beneath licence.

The licence is incredibly rewarding and is the basis of the complete business rescue plan …

A tale for a further working day.